Marknadsövervakning - 22nd August 2019
Sterling is little changed this morning following Boris Johnson's meeting with German Chancellor Merkel yesterday. The PM again stated that the Irish backstop needs to be removed from the Withdrawal Agreement. He said that Merkel had given him 30 days to come up with alternatives to the backstop and said there was scope for a deal to be done. Comments from Merkel this week have hinted that a compromise might be possible, however, French President Macron has sounded less receptive and he said yesterday that Johnson's demands were not workable. Johnson meets Macron in Paris today and traders will be on alert for headlines.
We have a busy day ahead for data. In the Eurozone, manufacturing PMI is expected to decline further from last month's 6-year low, driven by weakness in the German manufacturing sector. The ECB also release their July minutes.
We also have PMI data from the US and the manufacturing PMI could drop below the 50 level, which would signal contraction. There was no major news in last night's Fed minutes which were in line with Chair Powell's message at last month's meeting. Traders are waiting for Powell’s speech at Jackson Hole on Friday, which will be closely watched after the recent inversion of the US yield curve raised the spectre of a US recession.
The Chinese yuan fell to an 11-year low against the dollar overnight due to concerns about a global slowdown. The yuan's fall along with weakness in Asian equities has boosted the Japanese yen on safe haven flows.